Name: What clubs are learning about payment costs and member communication
Uploaded: 2026-06-03T21:00:11.903Z
Duration: 1 h
Description: What clubs are learning about payment costs and member communication

Transcript for "What clubs are learning about payment costs and member communication": Good afternoon, and thank you all for joining the webinar today. We're gonna hold for about sixty seconds to allow others to join, and then we'll get started. So hang with us just for a minute. Well, alright. We'll get started. Thank you for joining again. My name is Matt Popinski. I'm the chief customer and payments officer here at Daxko, and I have with me, today Colby Watkins, who's the senior director of payments programs, and Trey Foster, our director of payment sales. And so we've assembled a panel, a group of payments experts with collective forty five years worth of payments experience to address what clubs are learning about payments costs and, how member communication around those costs are emerging and, the best practices around those, those endeavors. So without any further ado, we will jump into our agenda for today. So, again, we're gonna talk about payment costs and, the current environment and what we're seeing across the industry and in the club, market specifically and what that means for your association. And then tagging on to that, we're going to address what clubs and gyms are doing to handle, those types of payments, cost increases. And then what, members actually expect when they are, experience a payment, increase, or something in relation to, surcharging or or cash discounting, what members actually expect in the environment that we all live in today and outside of it. And then we'll share some best practices and communication approaches that we found very successful as we've walked down this path with you all. And then finally, we'll share a real world story of one month of of experience with a club after a 10% dues increase. So with that, I will turn this over to Colby, and Colby will get started for us. Thank you, sir. Appreciate it. Hello, everyone. Thank you for joining us today. So as Matt said, we're gonna talk a little bit about, the cost of acceptance for, digital payment methods and then the strategies and methods by which we can, alleviate those costs and still, do right by our, our members. So, to give a little bit of of background here, you know, I don't think anybody in the audience is gonna be surprised to to hear that that costs are going up, whether it's gas or groceries or housing costs or even, you know, your, your merchant service, costs. Those are increasing for a number of reasons from, you know, economic drivers and inflation to expanding risk mitigation systems, you know, as fraud enters the next generation of its, of those threats with AI and and becoming more advanced and and capable, those threats are having to be met, by, an enhanced infrastructure, in that, digital payments, landscape. So as a result, all of those factors kind of, culminate together to create a net effect, which is an increase in overall cost to process these payments securely, risk free, and, safely between both your card holding numbers and then your, your, merchant bank, that's receiving those funds. So, you know, when faced with that challenge, you know, there's there's two obvious, approaches here. One is businesses will absorb the cost. So they'll just take that as a, cost of doing business. If the the, cost of, taking a a debit card or a credit card or an ACH payment goes up, it's just a fact of life, and they'll have to just, eat that as a as a cost in doing business. And then there's the, the, you know, kind of the, whole kitchen sink method, which is just we'll just increase our cost across the board, whether that is membership dues, personal training, locker fees, one time fees, programs, any sort of services or, anything of that nature just across the board just increasing. That is, you know, you know, sometimes can be a bit, of an overcorrection, when it's in the, in the pursuit of just offsetting the cost of this, this one, particular expense. But, you know, a probably a more strategic way or contoured way is taking advantage of a cost offsetting program, like what we've, provided here with, with flex fees. So flex fees essentially is, it's a checkout fee that shows out shows up at the point of, of acceptance, at the point of transaction when the member is checking out, to, to purchase, whether it's a product or service or a subscription. And, it's based on the method by which the customer is choosing to pay with. So if that is, with a credit card or an ACH or could just be with credit card, there's various strategies, by which you could, roll this out. Now that can vary based on, you know, what geography you're in, what what state, as well as, you know, how much, you're wanting to pass on, to that customer. There is a a national cap of, 3%, when it comes to adding a fee, at checkout. But that is not a fixed amount that you have to pass on. It could be, anything, below that that threshold as well. And then you also have the ability, like I said, to, to provide, this program, by credit card or, or ACH, those digital forms of payment, at checkout. And then that creates, an experience for the member by which, you know, and folks in the audience may be familiar with themselves as a as a consumer. But when you are, at the having that checkout experience, you may see that the upfront and center, it's hard to miss. It's it's own separate line item shows up on the receipt. But the most important thing it does is gives, the the cardholder or the member or the customer, awareness that the method of payment, that they're, choosing to pay with, will influence the amount, that at checkout. So they have the the option to say, I don't mind paying the fee. I'm gonna continue to use my credit card. Or they can say, you know, actually, let me change my mind. I wanna switch to, a a form of payment that would avoid that fee. And, you know, from what we've seen across the industry, this, is a a much more preferred, method of, increasing, pricing as opposed to just doing a carte blanche rate increase across the board. You're in this, in this strategy, you're giving the, the customers themselves the ability to to, avoid that that rate increase, at every transaction, at every checkout, at every, point. And and also at their discretion, they could, continue or they could make that choice to avoid, the payment in the future on, especially when it comes to recurring, recurring payments. And then finally, from a revenue standpoint, you're able to track that revenue in real time as those transactions are being completed. You'll be able to see, you know, fully within the system, How much am I recouping? How much am I offsetting? Am I actually, making a meaningful impact against the cost of my merchant services? Is this program actually working for me to offset these costs rather than just, raising your prices and and hoping that, that that's the, the the benefit there. So a little bit of, industry insights when it comes to, these cost offsetting programs. You know, as I said earlier, folks in the audience are probably no strangers to to these, types of checkout experiences. Today, one in three businesses, offer some sort of, form of, cost offsetting at the checkout, at the checkout experience. And then when it comes to, the cardholders themselves, the consumers, the majority, upwards of, three quarters are, you know, familiar with, seeing this in a past checkout experience. And then when it comes to, the clubs themselves, just in one year alone, these processing costs are not immaterial as should not be a surprise to to anyone, anyone listening today. You know, it's it's in the, the the multimillion 65,000,000 here. You can see, the figure on the screen, when it comes to, you know, just what it costs, to to take on, these, these merchant services. So for this sorry. There we go. Alright. So I'm gonna pass it over to, to Trey Foster here who's gonna talk a little bit more about these strategies and, what he's seeing, you know, in the real world with clubs that are adopting, these programs. Yeah. Thanks, Colby. Yeah. As Colby mentioned, I'm Trey Foster, director of payment sales here with Daxko. I've I've been here for a total of six years, all within the the payments ecosystem, here at Daxko, both customer facing kind of on a back end support side as well. So we've I I talk to customers every day. We what we've learned, what we how we've iterated and all that so we can share some of that information with you guys today. So really two columns in front of you, right, is, like, what what builds acceptance? As Colby's mentioned, this is fairly common. Pretty much all of us have seen a convenience fee, a surcharge, you know, in some form or fashion, probably weekly. It's just kind of a way of life now. But but further than that, you know, what are the things that that really build acceptance? It's, you know, it's lead with why. You know, why are we doing this? This isn't you know, we're trying to get one over on our members. It's for us to reinvest in our club, provide a better member experience for them, add program, add staff, whatever it may, you know, mean to you or whatever it, you know, helps drive what you guys need to do. Giving advance notice. So not only, does that provide a a better experience, and it gives them time to maybe make a change on the payment method that they have, it's also part of card brand regulation that they require a minimum of two weeks. As part of our launch timeline, which we'll go over, we recommend, you know, potentially a little bit longer than that too. Again, just gets everybody comfortable with the change and then lets them know what's coming. Colby went over this too. Offering a a fee free alternative. So it it's, hey. We know you like the credit card points and all of that, so 3% might not mean anything to some of your members. Others may wanna take advantage of that lower cost, option, switch over to a bank draft, which in turn drops your cost as well. Keep it brief. Keep a matter of fact. We don't need a long diatribe of why we're doing certain things. This empowers your staff to to quickly move on and and not get into these long winded conversations around, you know, why we're we're doing something here at the club. And it goes into that last point there where you're you're empowering your frontline staff with just clear communication. It's, hey. This is a drive you know, costs are rising. We're trying to provide, you know, the same, if not a better experience for you as they rise, and this is part of the process. Display fees transparently. So it's it's displayed on every receipt, needs to be displayed at every every point of sale, online member join processes. So over communication and visibility is gonna be very key. Some of the things that create friction, you know, announcing it at the front desk. Nobody likes to be surprised by these things. Real world experience is when you go into any sort of, you know, convenience store or gas station or some small boutique. You're shopping. You're doing whatever you need to do. You pick out your items. You go to the front desk, and all of a sudden you say, oh, if I'm paying with a card, it's gonna be three and a half percent, 3%, two and a half percent, whatever it is. Nobody likes to be surprised. So, again, making sure that we're transparent throughout the process is extremely helpful. And this is gonna be something this is a new new charge that that typically doesn't land well, and it sounds more like, you know, hey. This is just another way for us to make money. We're simply covering the operational costs for this and allows us to reinvest. No easy opt out. There you know, you have the advantage of of paying, you know, a a different way if you need to. No overly complicated language or rate table, so different percentage for different transactions or anything like that. It's just a flat percentage across the board, keeps it simple. Staff, I don't know what to say. Again, we we take this seriously. So during the onboarding process, you know, we provide, you know, other examples or success stories of other people and kind of what they've done and share that with you all and and allow you to take advantage of people who have already implemented this. Currently, we have over 1,500, I think, across our portfolio who are taking advantage of our flex Flexi program today. So we have plenty of information, plenty of examples that we can share with with you and your team. Timing it right after it do the increase, it depends on how it it comes across. Right? So if you communicate it the right way, it's not that big of a deal. If you bring it on, you know, shortly with no lead with no lead time, it's not gonna land as well. And moving in. So again, a real world story. So here's the one that Matt mentioned at the beginning that someone who who launched this the month after a 10% dues increase, and and really what happened is the members accepted it. And the reason why is they followed the communication plan, they followed the transparency advice that was provided. And again, the free fee availability of a flex fee. Those are all keys in making sure this lands well with, with membership. And to kind of go further on that, I would say if we do get any sort of, you know, objection or pause from a lot of our customers of what's this gonna do to my my membership, my current membership, we see no material change in membership launching this. And, again, we've got over 1,500 examples that that prove that this does not negatively impact current membership either. So, again, timing matters, but it isn't everything. Again, if it's done correctly, giving members a choice is obviously helpful. Transparency is a trust builder with your members. You don't want to leave them with a sour taste in their mouth and then making sure your staff is prepared accordingly. This is an example of one of our customers today. So in this example, they increased their credit card or increased any credit card transaction by 3% and added 44¢ to an ACH transaction. So their current state, of fees all in was about $36,000 to add the flex fee functionality, added about $10,000 to their their total cost. And then we looked at what the flex fee revenue was collected. On that, they were able to regain about $31,000, back to the bottom line, so making their net expense $15,000 as opposed to 36. Savings of almost 59% in this scenario. A lot of this depends on your card mix currently. Depending on how you accept payments, whether it's heavier debit, heavier credit, heavier ACH, that's what us and the team are here to do, is to run an analysis for you guys to understand what this impact would look like for you because everybody's a little bit different. Communication key. I think you're going to hear that more than once. Obviously, in this presentation, we have templates, that you guys can use and build off of. We don't pretend to know your member base better than you guys do. If you have a certain communication strategy that you like to use, we just have templates for you to start with, or you don't have to use them at all, but know that we have some examples for you guys to use. Launch timeline. So we typically look at about a forty five day window on on average. So the signed agreement, we determine the fee, you know, choose the structure, compose all of the forms so we're able to help you guys, with, displays, you know, with across the club, you know, at any point of sale, transaction, hey, in thirty days, this is coming. If you want to put it in your your membership newsletter, all of that can be done, as soon as the agreement signed, internal prep, which again includes that staff training, all the software setup, signage. And then this the the third step, kinda a day 30, this is where the card brand regulations come into play. Again, they require two weeks. We say thirty days just to be safe, over communicate, is key, at least a better experience. And then, the PM will your project manager will enable the fee on the forty fifth day, then we'll track, the receipts, track all the feedback, make sure everything is working properly, for you guys. And here kinda brings us to the end. I'm a bring back in Matt and Colby. We can talk about, you know, next steps for you guys to answer any outstanding questions that might be coming through, in the chat. Yeah. So we'll just start off while while I'm talking through this. Start thinking about any questions you might have, and then we'd be happy to answer those in the chat, so the panel certainly could be be open to that. But I think the the the takeaway for you all here is that, we would absolutely, be willing and and and and love to to review and and conduct a full financial impact against your payments volume, leveraging this different functionality and the different scenarios that Colby and Trey mentioned there. And then, obviously, taking a look at the member communication, that would be planned in the event that this took, was executed for your your club. And then when we talk about the readiness score, it's really an analysis of what your card brand your card mix, what the financial impacts could be on leveraging a program like flex fees on on credit cards and then our, something in the future around flex fees on cash discounting. So we'd absolutely be willing and able to to take to, to provide an out an analysis on the club level, so specific to your club, and and show you what this could look like in reality. So with that, we will open, with questions open for questions. You can put them in the chat, and we'd be happy to address anything that does come up. One thing I'll I'll mention too while we're maybe waiting on some of the questions is, this is, it differs from state to state. It's typically controlled by state legislatures. So we have currently, five or six prohibited states, I believe, today. Any of the ones that popped up in the chat, I saw Utah, Ohio, all of those are open for business for for any kind of surcharging program capped at 3%. So again, if you haven't had one done already, we're we're happy to provide a a full analysis that that Matt was talking about and let you see what your real dollars would be, in this scenario. And we would certainly be open to any payments related questions while we have the experts here as well. So anything that we're seeing Yeah. in in the market today, what we think is coming around the bend, certainly would open for any questions, payments, passing on cost of acceptance to to to, cardholders, any anything's on the docket. And I'll just add, you know, depending on you know, don't don't assume based on where you are, in terms of your, credit debit mix or, what state you're in. If you're interested in in reducing your overall cost of acceptance, reach out to us and and listen. We can have that conversation, and we can, you know, do the research, for your particular, scenario, all the all the dynamics going on, with your, digital payments acceptance, determining, you know, what would be the best strategy, what options are available, for reducing or even, you know, potentially eliminating, most of your, cost acceptance. Yeah. And I I would say we've done some some projects here, you know, recently, a crop portfolio wide. So when we think about some of our our smaller boutique businesses and all that, our our enterprise business, And you think about the money, on average that that is recouped, we're talking, you know, from the 8 to $15,000 range, you know, annually, and that will be, again, mixing in a ton of the smaller folks, a lot of the larger folks. So it's not gonna be the same story for everybody. That's why we'd like to just take a peek at at your numbers and and present them back to you. It might resonate a little bit more. Yeah. Jen, on your pardon me. On your question, regarding, fees for ACH, you do have the ability to, to apply a a fee to pass on pass on the cost for, ACH as well. Good question. Yeah. But you yeah. Just to just to elaborate and extend that answer a little bit more. You're not required, for that. So you have that, that optionality in terms of, you know, what you're wanting to what kind of experience you want to create at your club. So, you know, if you wanna do, credit and ACH or just credit cards, that's totally fine. The main restriction there is is, debit cards. There's explicit regulatory prohibition nationally preventing that from, from, being available. Correct. And and just like credit cards, ACH is is capped at cost. You're not allowed to pass along more than than your actual cost of the ACH or credit card transaction capped at 3% for credit cards Good question. in most states. I would say, without having the exact numbers in front of me, we we have about, I would say, 80 to 85% of of our current Flexi customers are passing along both fees, the credit card fee and an ACH fee. How much cheaper is it for a member to use in ACH? Well, it depends on the ACH cost, obviously, too. So it's typically a set price on on ACH today in the current environment. There are moves to have it be percentage based, in the future. But right now, if it's a $100 transaction and the charge is 43¢, it would be 43¢ to run run that typical credit cards around 2.75 to 3.25% on on those transactions. How much of the fees do you got? yeah. And, Correct. Jane, Hold on. I was talking. Yeah. I was just gonna speak to Jane's point about, passing on the the 45¢ or the 44¢. You know, that's something we hear, pretty commonly, before the program is adopted, that there's concerns about, you know, member sentiment or even member retention, concerns. And that just has not been the case that we've seen, for the folks that are adopting this. As Tracy said, there's, around 1,500, clubs and gyms that have, adopted these programs, and they have not, seen any sort of, you know, mass criticism or, you know, diaspora of of memberships over over this. Like, you mentioned earlier in the, in the program that, you know, customers are are used to seeing this in the in the checkout experience. They they understand it, especially in our in, in The United States. And, you know, when it comes to to these sort of, strategies compared to, just a a routine or a wholesale cost increase, This method is actually preferred to just a, you know, across the board increase on all of that your club or your gym offers. Yeah. And I'll just add to that. You Jenny, we we don't have to pass along the ACH increase either. So whatever that that fee is, you you you can absorb it because the more folks who move to ACH, if that's the goal, your costs are gonna come down organically anyway because the ACH transaction is less expensive than traditional credit card charges. So if I look down at the bottom, Chase, how much do you so this this will all go into that full analysis, Chase. So if we are able to do a deep dive into your current numbers today, understand what your card mix is, volume, transaction count, all of that, we can show you the picture of what the total ROI, would be plus the the cost of the service. What is that? It it varies. It really does. I don't wanna sound like I'm dodging the question, but it is completely based on what your card mix is and and what we're able to do, you know, what what we're able to drive from an ROI perspective. If you're heavier debit usage, sometimes the the program might not even make sense at all. It so it really just depends. Yeah. To to Trey's point, there's there's a number of variables here. The, average, interchange cost that your your club is experiencing. Also, if if you're if you're accepting 90% debit cards, it it may not make make sense, at that point to given that, given that, that that the dynamics there of your of your business activity. And, yeah, in terms of, like, what you're retaining, it's it's really offsetting the cost of of your expenses. So, I believe we mentioned earlier on that, you know, these these programs can be, with regards to flex fees, it cannot be a profiteering venture. It has to be a cost savings or an expense offset. So we don't have a way to, means to actually, you know, generate, profit off of, the fee that's being passed on at the at the, transaction or the checkout. Yeah. I don't think I need to tell anybody here, but, you know, after after payroll, you know, typically processing expenses are, you know, top three or four line item for for most, you know, businesses today. So we're able to help you guys offset, you know, two and a half, 3% of of that, you know, it can be, a nice, a nice hit back to the bottom line for you guys to reinvest. Well, alright, team. And, thank you so much, for the great questions and for the conversation today. We certainly appreciate your engagement and and leveraging the expertise here of the team. And, look, I I'll just say it one more time. We are absolutely open, to conducting that that club by club analysis so that we can answer these questions specifically to the use case, for each club. So with that, we will adjourn. And, again, thank you so much for your partnership and for attending today, and we look forward to working with you in the future. Thank you, everyone. Thanks, Take care. everyone.